Mexican conservatives tie support for energy bill to electoral reform

MEXICO CITY (Reuters) - Mexico's main opposition party said on Monday it would not back a government bill to open the oil industry without an electoral reform that aims to curb the power of the ruling Institutional Revolutionary Party, or PRI.

Lacking a majority in Congress, President Enrique Pena Nieto is hoping for votes from the conservative National Action Party (PAN) to change the law to allow the private sector to sign lucrative contracts for the exploration and production of crude.

The energy bill is one of the signature initiatives of the president's reform agenda, but it envisages constitutional changes that require a two-thirds majority in Congress.

Pena Nieto is also eager for strong cross-party support for the energy reform because it will open competition to Pemex, Mexico's state oil monopoly that was for years deemed an almost sacrosanct institution after the PRI created it in 1938.

However, Pemex has labored under a crushing tax burden, a lack of investment and corruption, sending crude production into the doldrums. After peaking at 3.4 million barrels per day (bpd) in 2004, crude output has now fallen below 2.5 million bpd.

Only with an injection of private investment, the government says, can Mexico turn around its oil production fast.

The PRI ruled Mexico for 71 consecutive years until 2000, when it was defeated by the PAN. But the PRI remained in control of most of the country's states, and the PAN never had a majority, struggling to pass major legislation while in power.

The opposition is eager to loosen the PRI's hold on the political establishment to help it compete, and when Pena Nieto forged a pact with opposition leaders to support his economic reforms, it included a pledge to work on electoral reform.

On Monday, the PAN outlined its proposal for changes to the law, and the party's chairman Gustavo Madero said if Pena Nieto wanted his energy bill to pass, electoral reform was a must.

"There won't be votes (for the energy reform) from PAN senators in congressional committees or on the floor of Congress until the floor has passed a constitutional political electoral reform," Madero told reporters in Mexico City.

The PAN plan foresees changes in electoral law that would permit direct run-off votes between presidential candidates, allow direct re-election of lawmakers and mayors as well as make excessive campaign spending grounds to annul elections.

The PAN's proposal will be sent to the Senate on Tuesday.

Currently, the Mexican president is elected with a plurality of votes, and a second-round run-off would allow opposition parties to join forces against the strongest candidate.

That tactic has been used by the PAN and the Party of the Democratic Revolution (PRD), the main leftist opposition party, to defeat the PRI at the state level in the last few years.

The PRD has looked far less likely to provide Pena Nieto with votes in Congress for the energy bill than the PAN, with some of its biggest names leading protests against it.

At present, Mexico does not allow immediate re-election of lawmakers or mayors, meaning much of the power for choosing candidates lies with the parties rather than the electorate.

The PRI has frequently been accused by the opposition of breaching campaign spending limits to win elections. Pena Nieto's victory in last year's presidential contest was attacked by claims the PRI had bought votes and overspent to win.

Pena Nieto rejected those accusations.

The PAN's reform is likely to meet with opposition from the PRI, which has signaled it could offer particularly strong resistance to the prospect of a direct presidential run-off.

The PRD is due to present its own proposal for voting reform later this week. That plan is likely to coincide with the PAN's vision in part, though it may lean towards pushing a model for coalition governments rather than a second round run-off.